Kerry to GSA: Don’t Eliminate Small Business Office Supply Contracts

Today, Sen. John Kerry [D-Mass.], chairman of the Committee on Small Business and Entrepreneurship, urged the General Services Administration [GSA] to postpone implementing a policy that could have a detrimental impact on many small businesses, and called for a Government Accountability Office [GAO] study evaluating the proposal. The GSA is preparing to drop office supplies from its Global Supply Stock Program. Currently, nearly 80 percent of government purchases of office supplies through this program are directed to small businesses.

“It’s unacceptable for the Administration to abandon innovative and effective small businesses in favor of a handful of big businesses," Kerry declared. "Before GSA eliminates these contracts, we need to know exactly what it means, economically and operationally, for the small firms that have been doing business with the federal government."

Kerry sent a letter to GSA Administrator Lurita Doan [pictured above] -- along with Ranking Member Olympia Snowe [R-Maine], Sen. Johnny Isakson [R-Ga.], and the chair and ranking member of the House Small Business Committee, Nydia Velázquez [D-N.Y.] and Steve Chabot [R-Ohio] -- asking the agency to halt the new policy.

The bipartisan group also announced that they will ask GAO to review the consequences of this policy change, given that the continued presence of the stock program’s office products also creates a vital and readily accessible resource to all government agencies for their various supply needs in times of emergency.

Following, is the text of their letter:

July 9, 2007

Ms. Lurita Doan
GSA Administrator
U.S. General Services Administration
1800 F Street, N.W.
Washington, DC 20405-0002

Dear Administrator Doan:

It has been brought to our attention that the General Services Administration [GSA] is planning to eliminate office supplies from its Global Supply Stock Program. The continued presence of the Stock Program’s office products creates a vital and readily accessible resource to all government agencies for their various supply needs. The Stock Program currently has multiple small businesses that provide office products to depots across the nation for stockpiling in the event of an emergency.

Under your proposal, office supplies would be eliminated from the Stock Program and we are concerned that these services will be allocated to a handful of larger business supply companies. At present, approximately 80 percent of the office supply procurements for the Stock Program are directed to small businesses. Therefore, any change to this program that does not fully and properly take into account the detrimental impact on small business greatly concerns us.

Before GSA moves forward, we request that you refrain from terminating the office supplies from the Stock Program until Congress has had a chance to review this matter in greater detail and consider potential detrimental economic impacts to small businesses. We are also concerned about the impact this will have on our Nation’s emergency readiness capabilities and our Country’s ability to react quickly to major disasters. Therefore, before GSA eliminates any items from the depot, we would like to fully understand the impacts of such a move.

In light of our concerns, we will soon request that the Government Accountability Office [GAO] study what impact removing office products from the Stock Program will have on the many small business suppliers that currently participate in the Stock Program and our Country’s emergency preparedness. We appreciate your confirming for us, within 30 days of receipt of this letter, that you will suspend any efforts to change the Stock Program with respect to office supplies until the matter has been independently evaluated by the nonpartisan GAO.

Thank you and we look forward to your prompt reply on this matter.

Sincerely,

John F. Kerry
Chairman
Senate Small Business Committee

Olympia J. Snowe
Ranking Member
Senate Small Business Committee

Nydia Velázquez
House Small Business Committee

Steve Chabot
House Small Business Committee

Johnny Jackson
U.S. Senate
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House Committee Considers Impact of New SOX Regulations on Small Business

Today, as Congress reconvened, chairmen of the Securities and Exchange Commission [SEC] and the Public Company Accounting Oversight Board [PCAOB] came before the House Small Business Committee to explain the impact of recently approved standards for complying with Section 404 of the Sarbanes-Oxley Act of 2002 [AKA SOX 404] on small public companies. Chairwoman Nydia Velázquez [D-N.Y.] reiterated her call for at least a yearlong delay in allowing time for small firms to comply.

"Before we set time frames, we need to know that these guidelines will work," Velázquez asserted. "I strongly urge the SEC to delay the implementation of these regulations, and to thoroughly test these guidelines to enable us to fully grasp the true impact on small businesses."

With concerns raised over the effect that SOX 404 will have on this nation's small businesses, Chairwoman Velázquez called for the SEC, prior to approving the new standards, to develop a "hard dollar" estimate demonstrating the costs of these regulations on small companies.

Committee members argued that more time is needed to determine whether or not these rules will actually reduce compliance costs. The requested delay would also enable small companies to train managers and auditors in best practices to ensure the regulations are implemented properly.

It was these same concerns that prompted Chairwoman Velázquez and Ranking Member Steve Chabot [R-Ohio, pictured above] to ask for additional time for small businesses to comply with SEC and PCAOB guidance in March. However, the current proposal fails to account for this original request.

"Though it has taken five years to come to these conclusions about implementing SOX 404 for small firms, we should not be too hasty in imposing these rules," said Chairwoman Velázquez. "This is not something that has been decided overnight, nor should it be thrown upon small companies overnight. The SEC needs to recognize the negative impacts that immediate implementation will have on small firms."

Though small businesses and lawmakers have rallied around the Sarbanes-Oxley Act of 2002 in an effort to prevent accounting fraud and rebuild shareholder trust in the wake of corporate scandals, some of its provisions have been applied in a way that disproportionately impacts smaller public companies.

For example, small firms would face increasing regulatory and paperwork burdens under the reporting requirements in Section 404 [SOX 404]. Many are paying a higher percentage of their revenues for legal and audit fees than their larger counterparts.

To compound the difficulties for entrepreneurs -- many of whom already operate on small margins -- a number have diverted resources from research and development to compliance, or returned to private ownership simply to avoid the regulation altogether. All of these consequences have a negative impact on competitiveness for small businesses and limits their ability to expand, and to create jobs.

"The reality here is that small businesses could be negatively impacted by these regulations," said Chairwoman Velázquez. "The writing is on the wall, and the SEC and PCAOB need to acknowledge that. Given the complexity of these regulations and the uncertainty that surrounds them, it is critical that small companies are not being rushed into implementing them."
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GoodBiz113 Issues Open Memo to Leaders of Congressional Small Business Committees

TO: Sen. John Kerry [D-Mass.], Chair, and Sen. Olympia Snowe [R-Maine], Ranking Member, U.S. Senate Committee on Small Business & Entrepreneurship; and Rep. Nydia Velazquez [D-N.Y.], Chair, and Rep. Steve Chabot [R-Ohio], Ranking Member, U.S. House Committee on Small Business

FROM: Kari Larson, Editor & Publisher, GoodBiz113

SUBJECT: Striving for Enforced Compliance, Accountability and Transparency

Last Friday, President George W. Bush praised America's small-business owners and employees, and proclaimed the week of April 22-28 as a time to recognize "their important role in ensuring that America remains the economic leader of the world."

The President's proclamation was issued on the eve of the U.S. Small Business Administration's observance of National Small Business Week in Washington, D.C. [April 23-24]. The two-day conference will focus on small-business accomplishments, including disaster recovery, federal contract procurement and entrepreneurial success. The celebration honors the nation's most outstanding entrepreneurs, and culminates with the selection of the National Small Business Person of the Year for 2007 from among the 53 state small-business winners, including the District of Columbia, Puerto Rico and Guam.

"The state and regional winners who will be a part of this event personify the entrepreneurial spirit that is vital to the growth of the American economy," said SBA Administrator Steven C. Preston [pictured above]. "They are an innovative and diverse group involved in technology, manufacturing, retail, construction, professional services and a host of other industries. We are proud to have them here in Washington, and we are proud to have helped many of them achieve their business success."

View from the Small-Biz Bunker

On the face of things, that's all good. However, it's not unlike watching this weekend's Zurich Classic of New Orleans on TV, then assuming that restoration of the PGA TOUR's lush TPC Louisiana golf course reflects widespread Gulf Coast disaster-recovery efforts in the 19-month wake of Hurricane Katrina. A wide-angle look reveals some major divots in the small-biz realm.

Current small-business set-aside and subcontracting Federal Acquisition Regulations [FAR] are well-intended to engage small businesses in the potentially lucrative realm of government contracting. Unfortunately, actual enforcement of FAR standards leaves a lot to be desired in order to level the playing field for small-business owners, entrepreneurs and their employees -- "the lifeblood of cities and towns across the country," declared President Bush.

Compliance Begins With Education
As with most issues, education is key. Since registering as a woman-owned small business 10 years ago, I've found that some decision-makers in several federally funded entities -- e.g., prime contractors, public agencies, land-grant educational institutions -- are totally unaware of their organization's responsibilities to procure business from small businesses and enterprises owned by minorities, women, veterans and socially disadvantaged populations. In too many cases, even the procurement directors and/or designated small-business liaison officers [SBLOs] neither knew, nor seemed to care, that they're contractually obligated to engage small businesses.

Proposed solution: Remind all federally supported agencies, companies and organizations that they need to comply with FAR set-aside and subcontracting standards, lest their funding be drastically reduced or cut off completely. Encourage each entity to fully educate managers of their procurement requirements -- perhaps by using a carrot-and-stick approach that rewards them for complying; e.g., the University of Minnesota's AIR [Awards Incentive & Recognition] Program, which kicks off July 1, 2007.

While you're at it, please remind DoD's Procurement Technical Assistance Center [PTAC] directors that they're funded to provide free or low-cost counseling to small-business owners wading into the federal contracting waters -- especially, via the General Services Administration [GSA], that convoluted, quasi-public behemoth conceived to somehow streamline the federal procurement process.

[FYI: I met one clever counselor who worked part-time for PTAC, earning all the accompanying benefits for himself and his family, a steady paycheck, etc. He also ran his own small-business consulting enterprise that charged folks -- mostly, his PTAC clients -- $14,000-plus to prepare the 300-page GSA schedules that he strongly suggested they complete in order to help land federal contracts. Legal? I guess. Ethical? You decide.]

Hold All Funded Entities Accountable -- and Do So Transparently
As of this writing, the total U.S. cost of the invasion of Iraq approaches $420 billion. That money has to come from somewhere, and federal agencies are duking it out for their share of the financial pie. Meanwhile, companies large and small are competing for federal contracts. Too often, it seems, one can't discern how federal contracting funds are actually spent.

Proposed solution: Require that all federally funded entities -- including agencies -- publish accounts of exactly how dollars are spent, and make those frequently updated reports easily accessible by virtually anyone via the Internet.

Last year, after noticing that an agency -- one that had previously done a consistent job of communicating with its small-business vendors, their stakeholders, etc. -- hadn't published anything, online or off, in months. Deducing a possible opportunity for my seasoned communications expertise, I queried the agency's Office of Small & Disadvantaged Business Utilization [OSDBU] director. He informed me that he'd retained a small agency to do the work -- two months prior to my call.

Suffice to say, about one or two months later, that OSDBU director left his post [as did the agency's secretary], and no deliverables ever manifested. Further, as much as the new, interim OSDBU director wanted to engage my services, he couldn't, because the creative-services agency commissioned by his predecessor had sapped the communications budget.

In another instance, I had occasion to discuss my concerns about contracting practices with a U.S. Senate legislative assistant. When I asked him about discerning exactly how, if at all, defense contractors, agencies, etc., were fully complying with FAR small-business standards, he replied that it would be impossible to do without subpoenas for each entity.

Allocation of public dollars should be public information. During National Small Business Week, we celebrate the far-reaching contributions of America's 25.8 million small businesses that generally create 60 to 80 percent of the net new jobs, and contribute $918 billion to the U.S. economy. It would greatly benefit all concerned if your committees announced an initiative to enforce full compliance, accountability and transparency regarding FAR's small-business set-aside and subcontracting standards.

Sources: U.S. Small Business Administration, U.S. Census Bureau

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